I hope everyone had a happy hangover to start the new year! And it's about time to decide what I'll be buying into with this Friday's paycheck.
Preferreds have gotten clobbered over the last six months or so and lots of them are trading below par. I'm thinking that I will be buying into these for the beginning of the year. I may run the risk of catching falling knives but I'm thinking that interest rates rising may already be baked into the prices.
So. Right now, my minimum yield requirement is 8%. I'm not worried so much about whether the preferred is rated or not - what I do want is evidence that the dividend can continue to be paid. A positive pe and or a dividend being currently paid on the common shares is a quick and dirty way to evaluate for that. And then reading about the company and so on...
(NYSE:NRF) - I own a small amount of the D shares. Am thinking about picking up some more of this or which ever preferred is yielding highest/most below par. Next div payment should be in mid Feb. D shares are about a current 9% yield.
(NYSE:RSO) - Picked up some more of the B shares a couple of weeks ago after selling off CSQ. Much like NRF - lots of people list it as a mreit even though they actually own physical assets and not just paper.
(OXCL) - The O shares are currently below par and is about a 8% yield. This is a cef. What is nice is that the preferred must be paid before the holders of the fund are, so somewhat safe. And it's a monthly pay. OXCLO is also a mandatory redemption in 9 years. Giving this one some thought.
(NASDAQ:BPOP) - I own about as much as I'm comfortable with in a single holding (probably more than I'm comfortable with). Sold off the O shares for a decent profit and switched into the P shares which promptly cratered and then bounced back. Bought below par. Puerto Rico has problems, but this bank is the biggest one down there and also has some branches on the mainland US and may have room to expand. I have been following this company for over a year and have seen numerous statements that they want to exit the tarp program. I believe the P series preferred would be the first one to be called as it has the highest yield.
So right now I'm looking at NRF and OXLC preferreds as my first picks for tomorrow. And even though I don't have that much money in this account, I noticed that I get dividends every two weeks or so. The ones from CEFs get compounded back into that fund as long as they're at a discount and the preferreds get compounded into new investments (as they're usually too thinly traded for a drip).
Backup option would be ETB again - trading at its 12 month biggest discount. Actually, I'm going to edit in (NYSE:GEQ) as a backup option. Should be due to declare a distribution any day now payable at the end of the month.
I will have to update my holdings list shortly. Not much point in doing this if I could do better with indexing, but we really haven't had a nasty correction yet for comparison purposes...
Edit for today - managed to pick up some OXLCO.